By Mike Cronin
With income taxes dues in a little over a month and presidential hopefuls in the news every day, now might be a good time to consider some changes to our tax code. I’ve opined in previous posts that it is not greedy to want to keep what you earn, but it is the essence of greed to want what others have earned. Our current tax and fiscal policy system is fueled by the greed of politicians who promise things they have no right to give, and by the people who want what those politicians are promising. The primary weapon used for the plunder is income tax withholding, i.e. the taking of your money before you ever see it. This is called confiscatory taxation – your taxes are confiscated from you.
There is a movement afoot to take the government’s power to relieve you of your hard-earned money and put it back in to your hands. The general idea is to replace the confiscatory income tax with a consumption-based tax – which means taxing you on what you buy and consume instead of on what you make. The most notable proposal for a consumption-based tax system is called the Fair Tax.
The philosophical difference between the confiscatory system we have now and a consumption based system is stark.
The confiscatory system requires the government take money from you by force (i.e. the threat of arrest and punishment for not filing/paying). It encourages politicians to use taxes to fund elements of the government that have no Constitutional right to exist, and worse, to use taxes to change behavior. It places a huge compliance burden on you and businesses. Lastly, and perhaps most egregiously, it fuels envy politics by allowing demagogues to cry for the rich to pay an ever-increasing portion of the tax bill, while allowing nearly half the population to consume an enormous amount of government benefits and entitlements w/o consequence or motivation to change. Worst of all, the harder you work and the more you produce, the more you are taxed. Americans have accepted this for a while, but we are beginning to wake up and see that punishing productivity is insane – if you want more productivity, jobs, and economic growth. On the other hand, if you want power over millions, a good way to obtain it is to divide and conquer by pitting the masses with low incomes against the few with extraordinary incomes.
A consumption-based taxation system more closely aligns government revenue collection with the morality most of us follow every day. First, it allows the taxpayer much more control over how much tax he or she will pay, and it puts the government in the role of beneficiary instead of bully. Second, it more logically aligns with how we pay for almost everything else in life. (E.g. if we don’t buy much jewelry, then we aren’t forced to pay for jewelry). A person (or business) with large consumption habits is presumably using more government than someone with low consumption habits. Under a consumption-based taxation system, big consumers will pay more for government than the small consumer, and income will no longer be a factor. In short, people will pay their taxes in direct proportion to how much they consume instead of how much they make. This will return some of the power Washington stole from us and put back in our hands. Oh, and it will mean no more 1040s and no more IRS!
Sounds eminently fair to me.